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Taxing Diamonds to Reduce Unemployment in Namibia: Would It

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Taxing Diamonds to Reduce Unemployment in Namibia: Would It September 2014 • Working Paper 77E Regional Inequality and Polarization in the Context of Concurrent Extreme Weather and Economic Shocks Julie A. Silva Corene J. Matyas Benedito Cunguara Julie Silva is assistant professor at the University of Maryland, Corene Matyas is associate professor at the University of Florida, and Benedito Cunguara is a research associate at Michigan State University. i DIRECTORATE OF ECONOMICS Report Series The Directorate of Economics of the Mozambican Ministry of Agriculture in collaboration with Michigan State University produces several publication series concerning socio- economics applied research, food security and nutrition. Publications under the Research Summary series (Flash) are short (3 - 4 pages), carefully focused reports designated to provide timely research results on issues of great interest. Publications under the Research Report Series and Working Paper Series seek to provide longer, more in depth treatment of agricultural research issues. It is hoped that these reports series and their dissemination will contribute to the design and implementation of programs and policies in Mozambique. Their publication is all seen as an important step in the Directorate’s mission to analyze agricultural policies and agricultural research in Mozambique. Comments and suggestion from interested users on reports under each of these series help to identify additional questions for consideration in later data analyses and report writing, and in the design of further research activities. Users of these reports are encouraged to submit comments and inform us of ongoing information and analysis needs. This report does not reflect the official views or policy positions of the Government of the Republic of Mozambique nor of USAID. Raimundo Matule National Director Directorate of Economics Ministry of Agriculture Recommended citation: Silva, J., Matyas, C., and Cunguara, B. 2014. Regional Inequality and Polarization in the Context of Concurrent Extreme Weather and Economic Shocks. MINAG Working Paper 77E. Maputo, Mozambique. ii SUMMARY This study examines how extreme weather in the context of on-going economic shocks influence regional inequality and polarization within Mozambique. Utilizing satellite-based estimates of rainfall that we spatially analyze within a GIS, we establish a 16-year rainfall climatology and calculate monthly rainfall anomalies for 674 villages. We approximate storm-total rainfall from all tropical cyclones entering the Mozambique Channel, as well as the extent of damaging winds for those making landfall, between 2005 and 2008. We group villages according to tropical cyclone impacts and use hierarchical cluster analysis to group the remaining villages according to shared patterns of monthly rainfall anomalies. Using economic data from the 2005 and 2008 National Agricultural Survey of Mozambique, we relate weather patterns associated with near normal rainfall, tropical cyclones and flooding, and drought to changes in inequality and polarization by conducting decomposition analyses of the Gini index and Duclos-Esteban-Ray (DER) polarization index. Our findings mainly correspond to the generally accepted view that weather shocks exacerbate existing economic income and divisions within societies. However, in some cases we find evidence that inequality and polarization can decline in the aftermath of an extreme event, and increase even where the weather is relatively good. By identifying varying effects of extreme events on inequality and polarization at sub-national level, our study enables a more detailed understanding of weather-related effects on socio-economic outcomes in rural societies rapidly integrating into the global economy. iii ACKNOWLEDGMENTS The authors thank the United States Agency for International Development (USAID) and the Ministry of Agriculture for their support in data collection and processing. iv DE/MSU RESEARCH TEAM Raimundo Matule, National Director, Directorate of Economics Eulalia Macome, Coordinator of Policy Analysis Department Aurélio Mate, Head, Statistics Department Domingos Diogo, Advisor, Statistics Department Antonio Manuel Paulo, SIMA Coordinator Simão C. Nhane, Senior Assistant to SIMA Coordinator Francisco Morais, Enumerator Trainer Abel Custódio Frechaut, Junior Assistant to SIMA Coordinator Arlindo Rodrigues Miguel, Agriculture Policy Analyst Raúl Óscar R. Pitoro, MSU Analyst and PhD student Helder Zavale, UEM/MSU Analyst Maria Jose Teixeira, Administrative Coordinator Amélia Soares, Administrative Assistant Rafael Uaiene, MSU Country Coordinator in Mozambique Ellen Payongayong, MSU Analyst and Statistics Training Coordinator in Mozambique Rui Benfica, MSU Analyst Duncan Boughton, MSU Analyst Cynthia Donovan, MSU Analyst David Mather, MSU Analyst David Tschirley, MSU Analyst Jaquelino Massingue, MSU Analyst Mouzinho Bordalo, MSU Analyst Benedito Cunguara, MSU Analyst v TABLE OF CONTENTS SUMMARY ........................................................................................................................................................ iii LIST OF TABLES............................................................................................................................................ vii 1 INTRODUCTION ..................................................................................................................................... 1 2 MATERIALS AND METHODS ............................................................................................................. 4 Socio-Economic Data and Variable Construction ........................................................................................... 4 Constructing the Climatology and Grouping Villages by Rainfall Patterns ......................................... 5 Gini Decomposition ..................................................................................................................................................... 7 DER Polarization Index Decomposition ............................................................................................................. 8 3 RESULTS ................................................................................................................................................. 10 Regional Groupings by Shared Weather Patterns ....................................................................................... 10 Near-normal Rainfall Patterns ....................................................................................................................... 11 Tropical Cyclone and Flood Affected Areas .............................................................................................. 11 Progressively Worsening Drought Conditions ........................................................................................ 13 Decomposition of Gini and DER Indexes for Total Income across Rainfall Clusters .................... 14 High Variability at the Group-level ............................................................................................................... 15 Scenario 1: Increasing Inequality and Polarization ............................................................................... 17 Scenario 2: Decreasing Inequality and Polarization .............................................................................. 18 Scenario 3: Decreasing Inequality and Increasing Polarization ....................................................... 19 Distribution Dynamics in the Context of Weather-related Shocks ................................................. 19 4 DISCUSSION ........................................................................................................................................... 21 Declining Inequality and Polarization in the Aftermath of Weather-related Shocks ................... 21 Good Weather and Increasing Inequality and Polarization .................................................................... 24 5 CONCLUSION ......................................................................................................................................... 25 REFERENCES ................................................................................................................................................. 28 vi LIST OF TABLES Table 1 Income and Poverty Profile for Weather Groups ............................................................................. 32 Table 2 Gini Index Decomposition for Total Household Income/AE by Weather Groups, 2005 . 34 Table 3 Gini Index Decomposition for Total Household Income/AE by Weather Groups, 2008 . 35 Table 4 Decomposition of the Polarization Index (DER) for Total Household Income/AE by Weather Groups, 2005 (ɑ = 0.75*) ......................................................................................................................... 36 Table 5 Decomposition of the Polarization Index (DER) for Total Household Income/AE by Weather Groups, 2008 (ɑ = 0.75*) ......................................................................................................................... 37 Table 6 Variation in Inequality and Polarization for Weather Groups ................................................... 38 LIST OF FIGURES Figure 1 Weather Groups .............................................................................................................................................. 7 Figure 2 Boxplots Depicting Proportion of Normal Rainfall for Each Group November – March in a) Season 1, b) Season 2, c) Season 3....................................................................................................................
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